For the first time in its 117-year history, United Parcel Service (UPS) is offering buyouts to its U.S.-based delivery drivers.
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The move comes as the company plans to shed 20,000 positions and close 73 facilities as part of the largest network reconfiguration in its history. The delivery and logistics giant is grappling with stagnant parcel volumes and high labor costs, which are weighing on its stock.
UPS employs about 330,000 full- and part-time delivery drivers, clerks, and package handlers represented by the International Brotherhood of Teamsters. Full-time drivers are eligible for the new buyout, the company said in a news release.
Difficult Times
Atlanta, Georgia-based UPS had signaled after its latest financial results in the spring that it was planning a network overhaul due to a slide in deliveries for its key customer Amazon (AMZN), and as U.S. President Donald Trump’s tariffs impact shipments and demand for its logistics services.
UPS said that the new buyout packages will be in addition to any retirement benefits such as pension and healthcare that unionized employees receive. However, it looks like the company might receive some pushback on its planned buyouts from the Teamsters union.
In a written statement, the Teamsters called the UPS buyouts an “illegal violation” of their national contract, under which UPS had committed to create 22,500 more jobs. “Our members cannot be bought off and we will not allow them to be sold out,” said the union. UPS stock has declined 15% this year.
Is UPS Stock a Buy?
The stock of United Parcel Service has a consensus Moderate Buy rating among 21 Wall Street analysts. That rating is based on 11 Buy, eight Hold, and two Sell recommendations issued in the last three months. The average UPS price target of $112.80 implies 8.33% upside from current levels.
